Chapter 4: Law of Agency Flashcards

1
Q

Can an Agent delegate duties to a Sub-Agent?

A

Generally, no.

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2
Q

When may delegation to a Sub-Agent be allowed?

A
  1. Where the principal expressly authorises the agent to delegate some of their duties.
  2. Where the authority to delegate can be implied from the circumstances.
  3. Where the delegation is in accordance with trade custom.
  4. In the case of necessity.
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3
Q

Who does the Sub-Agent work for?

A

He works on behalf of the Agent not the Principal. The Agent is liable to the Principal for the actions of the Sub-Agent.

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4
Q

Explain the Involnert Management Inc v. Aprilgrange Ltd (The Galetea) case:

A
  1. Claimants yacht caught fire and insurer refused to pay the claim. Sued the insurer and brought in the placing and producing brokers too. Placing broker was negligible but as the producing broker is the one ultimately liable to the client, they were responsible.
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5
Q

Explain the Lucifero v Castle (1887) Case in relation to Good Faith:

A

Principal engaged an Agent to buy a yacht for him. Agent found a yacht and bought it, then tried to sell it at a higher price to the Principal. Court held that the Principal only had to pay what the Agent paid for it.

Agent’s duty of good faith requires full disclosure to the Principal.

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6
Q

What is the Duty to Account?

A

An Agent has to account for all the money received in the course of agency duties.

Client money is kept separately from Agent money.

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7
Q

Explain the 1906 Marine Insurance Act in relation to the Duty of Account:

A

The broker is personally liable for the payment of a premium under the MIA. If non-payment, insurer can come after broker so caveat / lien is usually put into the contract.

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8
Q

What are some remedies for Breach of Duty?

A
  1. Sue the Agent for damages for Breach of Contract.
  2. Dismiss the Agent without notice or compensation.
  3. Sue the Agent for the bribe paid.
  4. Rescind contract and refuse commission if breach is fraudulent.
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9
Q

Explain Imputed Knowledge:

A

The law assumes that the principal is aware of any / all the information held by or has been given to the Agent.

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10
Q

What are the two Rights to an Agent?

A
  1. Right to remuneration

2. Right to indemnity

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11
Q

When is a Right to Payment implied?

A

When the agent is in business and does work which would not usually be done for nothing.

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12
Q

When do Agents lose their Right to Indemnity?

A
  1. Their actions were not authorised by the Principal.
  2. They were in breach of their duties as the Agent.
  3. The act for which they claim indemnity is illegal or void by statute.
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13
Q

Define Lien:

A

A lien is the right to retain the goods of another as security for payment of a debt.

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14
Q

What are the two types of Liens?

A
  1. Particular: the right to retain particular goods in respect of which payment is due.
  2. General: the right to retain any property used as security.
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15
Q

When does a Lien come to an end?

A

When the Principal pays or offers to pay the sum due.

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16
Q

Define Actual Authority:

A

Authority of the Agent tis real, in the sense that they have been given the right to act either expressly or implied.

17
Q

Define Apparent Authority:

A

The Agent has no real authority but it appears to a third party that they have authority and are able to bind their Principal.

18
Q

What is Apparent Authority?

A

The law recognises that third parties are bound to rely on what appears to be the authority of the agent.

Principal is bound / liable for all actions, whether authority is actual or apparent.

19
Q

What is Agency by Estoppel?

A

Where a person may hold out another person as being their Agent, where the Agent has no authority at all, in order to deceive a third party.

20
Q

Why should Principals also tell third parties that an Agency has ended?

A

Because they may not be aware that the authority of the Agent has ceased and you (the Principal) may still be bound by their apparent authority.

21
Q

What is the difference between a disclosed and undisclosed principal?

A

Disclosed: one whose existence is known to the third party at the time the contract is made.

Undisclosed: the third party is unaware that they are dealing with an agent.

22
Q

When may an agent be sued or held liable for actions on behalf of the principal?

A
  1. In some cases when deeds are signed.
  2. Trade customs can sometimes make agents personally liable.
  3. If the agent signs their name on things like cheques or bills of exchange and doesn’t disclose they are signing on behalf of someone else.
23
Q

Can an undisclosed principal enforce a contract against a third party?

A

Generally, yes.

The third party can be sued by someone they didn’t know they were contracting with.

24
Q

Can a third party enforce a contract on an undisclosed principal?

A

Yes. They can either do so against the agent or against the principal - this is called the right of election.

The third party can only sue one or the other.

25
Q

What is the Right of Election?

A

Where a third party enforces the contract of an undisclosed principal against either the principal or their agent.

26
Q

How can a third party sue an agent or principal? (3 actions)

A
  1. In contract.
  2. Breach of Warranty - where the agent has no authority to act or exceeds their authority, the third party can sue for breach of warranty of authority.
  3. In tort - if the agent commits a tort when acting their authority, the principal will be liable.
27
Q

What are the 9 ways agency can be terminated?

A
  1. Agreement - if both parties wish to dissolve the agreement.
  2. Performance - if the task the agent is employed to do is completed.
  3. Lapse of Time - if employed for a specific period of time which has now elapsed.
  4. Withdrawal of Authority - principal can withdraw authority at any time but could then be sued by the agent for breach of contract (especially remuneration).
  5. Renunciation by the Agent - agent can renounce their duties to the principal.
  6. Death - if either party dies, the agency is terminated.
  7. Bankruptcy - bankruptcy of principal automatically terminates the relationship, but bankruptcy of agent only terminates if it means they can’t do their duties.
  8. Insanity
  9. Frustration